EU Has Changed Fundamentally Since UK's Departure
As Keir Starmer's premiership draws to a close and Andy Burnham prepares to enter No 10, the question of the UK's relationship with the EU has resurfaced. Wes Streeting, a former contender for the top job and now a possible future chancellor, recently stated that Britain should be back in the EU. However, the rejoin debate in the UK has focused narrowly on two issues: the cost imposed by Brexit on the UK economy and the price of rejoining, particularly whether the UK could recover its opt-outs from the Euro and Schengen areas.
According to Mujtaba Rahman, managing director for Europe at Eurasia Group, this discussion fails to grapple with bigger international questions: what has the EU become, and is it a club that UK political elites and the public would want to rejoin? The EU of 2026 is an organisation built increasingly on common borrowing, an assertive joint industrial policy, and a growing role in security and defence that encroaches on traditional nation-state powers. It is also moving toward a far more assertive stance regarding the US and China than that of the British government.
Common Borrowing Reshapes EU Fiscal Landscape
Since the UK exited, the EU has changed beyond recognition. Confronted with shocks and crises, the remaining 27 governments have responded with substantial joint debt backed by the EU budget. To deal with Covid, the EU borrowed €100bn from capital markets and lent it to member states for furlough programmes. As the pandemic worsened, the EU borrowed a further €750bn, largely passed on as grants for green and digital investments.
The US's retreat from its promise to keep Europe secure prompted the European Commission to borrow €150bn to support defence-industrial collaboration through the Security Action for Europe (Safe) initiative. Much of the EU's aid to Ukraine has been funded similarly. This represents one of the most profound shifts in European integration history. Common borrowing is not merely a new financing tool but a form of quasi-political and fiscal integration that many Eurosceptics long warned the EU would pursue. Had the UK remained, it would almost certainly have opposed it, often seeking to veto or dilute such moves.
Common debt will be the EU's tool of choice for future shocks. As part of the EU's next long-term budget (2028-2034), Brussels has proposed creating a permanent fiscal capacity to borrow from capital markets whenever needed. More shared borrowing will necessitate more supranational taxation, so the commission is pushing for EU-wide corporate and digital taxes to help repay the growing debt load.
Interventionist Industrial Policy Marks New Direction
The EU of 2026 is also more interventionist and protectionist regarding its single market. Its increasingly permissive approach to state aid, alongside instruments like the proposed Industrial Accelerator Act—designed to boost Europe's strategic industries and counter unfair Chinese competition—and Safe, reflects a new willingness to use industrial policy as a geopolitical tool. Brussels has targeted Chinese overcapacity and restricted US firms' access to EU defence financing through 'buy European' requirements intended to strengthen Europe's own industrial base and strategic autonomy.
Under both Conservative and Labour governments, the UK historically opposed closer European fiscal integration, large-scale supranational borrowing, and activist EU industrial policy, preferring open markets. Successive British governments have also preferred to preserve close economic, security, and strategic ties with Washington while balancing increasingly hawkish rhetoric on China with continued economic pragmatism. The EU's stance toward both countries is heading in a much more combative direction.
Technological Sovereignty and AI Regulation Highlight Divergence
The bloc's growing push for technological sovereignty marks another departure from British instincts. The commission's tech sovereignty package reflects a growing determination to reduce the EU's dependence on Silicon Valley providers. While the UK shares some concerns, British governments have been more comfortable operating within a US-led technology ecosystem, favouring transatlantic cooperation.
Artificial intelligence may prove the clearest example of divergence. Whereas the EU has led with comprehensive regulation, the UK has deliberately marketed itself as a lighter-touch alternative, arguing that freedom from EU rules strengthens its attractiveness for AI investment and innovation.
Institutional Shifts Away from British Preferences
Institutionally, the EU is moving away from traditional British preferences. The arrival of Hungary's new prime minister, Péter Magyar, has provided senior EU officials with the opportunity to move away from national vetoes in areas such as foreign policy, sanctions, and EU enlargement—towards a majority voting approach long championed by Brussels, Paris, and other advocates of a more sovereign Europe.
Rahman notes that these developments are not necessarily wrong for the EU, nor should they mean the UK should not seek to rejoin, or that a future British government could not pull the EU back in a more liberal direction from within. But any serious rejoin debate must start from an honest assessment of what the EU has become. The real question is no longer whether Britain could recover its old opt-outs and budget rebates, but whether it is prepared to join a union that is more fiscally integrated, more interventionist, more geopolitical, and markedly less British than the one it left.
